UiPath Stock Is Worth Believing in Here as Wood Holds Fast
UiPath (NASDAQ:PATH) stock hasn’t had an easy go of it lately, but it’s not alone.
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Growth stocks have been quite a disappointment for investors in recent weeks. The main market indexes have weathered the economic storm of inflation and disappointing growth.
Unfortunately, a lot of the high-flying growth stocks of 2020 have been crushed. Some popular names have seen declines of greater than 30% within a short few weeks.
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PATH stock fell from a high of $85 all the way to its current price of approximately $43. This drop wiped out around 40% of equity for investors that invested near the highs. However, this may be an opportunity to get this high-potential company for cheap.
ARK Investment and PATH Stock
Famous growth investor Cathie Wood of ARK Investment has noticed the decline in PATH stock and has been buying on the way down.
ARK Investment bought a total of 969,890 PATH stock for four of its exchange-traded funds.
ARK Innovation ETF (NYSEARCA:ARKK) purchased 430,278 shares
ARK Autonomous Technology & Robotics ETF (NYSEARCA:ARKQ) purchased 100,124 shares
ARK Next Generation Internet ETF (NYSEARCA:ARKW) purchased 194,241 shares
ARK Genomic Revolution ETF (NYSEARCA:ARKG) purchased 245,247
What is more important than the absolute number of shares purchased is the thinking behind it. UiPath is now a top holding in the ARKQ.
As of December 17, 2021, PATH stock is now the 4th largest holding of the fund with an allocation of 6.37%. The ETF has purchased about $136.8 million worth of stock in total.
The fact that she bought PATH stock for different ARK funds means that she sees the robotics software company as a key player for a wide variety of industries.
This hints that the addressable market of UiPath could be many times larger than the narrow field of robotics.
Truth Wins Out
Cathie Wood has fallen out of favor with the press and investors.
In a Tweet she said, “For those who have been unsettled by the volatility of ARK’s strategies in recent months, I would like to share this deeper dive into the thoughts we have been sharing regularly. Remember: truth wins out!”
I recommend readers check out her thoughts.
A situation like this should be familiar for the long-time fund manager. It wasn’t too long ago that she was being mocked on her bullish stance on Tesla (NASDAQ:TSLA).
TSLA stock went on a nose-dive around 2019. In fact, many thought the electric car company’s days were numbered. Tesla had been facing a lot of growing pains at that time.
Cathie Wood was not deterred though and was aggressively buying. Her strong conviction on TSLA was eventually rewarded many times over.
I believe that these purchases show that she may have a similar conviction for UiPath. These purchases aren’t too surprising as PATH stock fell despite having Q3 2021 results that surpassed Wall Street’s expectations.
The impetus of the drop was more a result of overall macroeconomic concerns and not company-specific issues.
Even analysts who reduced their price targets agree with this assertion. KeyBanc analysts lowered PATH stock price target from $86 to $69 citing the higher interest rate/lower valuation environment.
This lowered price target implies around a 56.8% gain from current prices.
Your Takeaway
It is in times like these that the stomach and fortitude of long-term-oriented investors are tested.
It’s easy to say that you can accept the volatility and have a long-term time horizon when stocks are going straight up. A commitment to this strategy is much harder to maintain during periods of drawdowns.
UiPath continues to be a solid company to own for the long run. ARK Investment aggressively accumulating shares should be considered a strong vote of confidence.
I believe there is plenty of upside left for PATH stock.
On the date of publication, Joseph Nograles did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Joseph Nograles is a part-time freelance copywriter focused on the financial industry. He has worked in a wide variety of industries from tech to consulting with one of the “big four.” He has always enjoyed analyzing businesses and has been a CFA charterholder for nearly a decade now.
Joseph Nograles is a part-time freelance copywriter focused on the financial industry. He has worked in a wide variety of industries from tech to consulting with one of the “big four.” He has always enjoyed analyzing businesses and has been a CFA charterholder for nearly a decade now.
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